Redundancy, TUPE and Collective Consultation
(I). Redundancy, TUPE and Collective Consultation
(a). Redundancy
Redundancy is one of the six legally permitted reasons for
dismissal. Redundancy is the permitted reason for dismissal where
1. an employer ceases operations altogether,
2. closes down a particular location,
3. has a reduction in its needs for employees to do work of a
particular kind (which includes reductions in the workforce to save
the employer money)
(i). Fair procedure
If an employer is making less than 20 people redundant in a period
of 90 days then in order to avoid successful unfair dismissal
claims it needs to have followed a fair procedure. The precise
procedure that is required will differ from case to case, but in
general terms a fair redundancy procedure usually involves;
1. advance warning of the risk of redundancies
2. consultation with the individuals affected
3. consideration of alternatives to dismissal
4. a fair method of selection
Where the method of selection used is a number of selection
criteria against which employees are scored, the scoring exercise
should be carried out fairly and the selection criteria should be
reasonably objective.
(ii). Collective Redundancies
In cases of collective redundancies (i.e. where 20 or more
employees are to be dismissed within a 90 day period) there are
more stringent requirements. In such cases the employer is
required to;
1. consult in advance with representatives of the affected
employees
2. complete consultation before notices of dismissal are given
The Union
Wherever a Union is recognised, redundancy consultation has to take
place with an authorised official of that Union. The majority of
the CWU's members work for employers that recognise the CWU.
In cases where the Union is not recognised, the employer can choose
to hold elections for representatives for the purposes of
collective consultation or it can consult with other appropriate
representatives appointed by the employees and there is no reason
why these representatives cannot be Union members.
The Consultation Period
If the employer is proposing to dismiss between 20 and 99 employees
in the 90 day period then the consultation must last at least 30
days. If the employer is proposing to dismiss 100 or more employees
then the consultation must last at least 90 days.
The Consultation Process
The consultation process requires that the employer gives the
representatives certain information in writing, including;
1. the reasons for the proposed redundancies,
2. the number and description of employees they propose to dismiss,
3. the proposed method of selection and carrying out the dismissals
4. the proposed method of calculating any redundancy payments (if
the employer is intending to pay more than the statutory minimum)
The consultation should include ways of avoiding the redundancy
situation or the need for dismissals altogether, or of reducing the
number of dismissals and mitigating their effects.
(iii). The Protective Award
If an employer fails to comply with its collective consultation
obligations then the representatives can make a claim for a
"protective award". In most cases involving CWU members,
the Union will be the representatives for consultation purposes and
it would be for the Union to bring a protective award claim.
Therefore if there are redundancies proposed in relation to members
that you represent and you think that the collective consultation
obligations apply and have not been complied with you should notify
the Legal Services Department immediately.
Time Limits
There are two time limits for making a protective award claim -
either;
1. before the date on which the last of the dismissals to which the
complaint relates takes effect, OR
2. within three months of the date on which the last of the
dismissals to which the complaint relates takes effect
The Tribunal will only consider a complaint out of time if it is
satisfied that it was not reasonably practicable for the claim to
be made in time.
Defence
The employer can defend a claim for a protective award only on the
basis that there were "special circumstances" which meant
that it could not comply with its collective consultation
obligations. Employment Tribunals generally take a fairly robust
approach to the "special circumstances" defence, meaning
that in most cases where the employer has not fully complied with
its collective consultation obligations (including having a
consultation period for thirty or ninety days as appropriate) the
prospects of the Employment Tribunal making a protective award will
be good.
Remedy
If an Employment Tribunal upholds a protective award claim, it will
make an award in respect of a class of employees which it will
identify by a general description. Case law says that if the
complaint is brought by the Union then only Union members should be
covered by the award. The legislation allows for an award of up to
ninety days pay for each of the affected employees irrespective of
their financial loss. Where there has been some consultation but
not for the full statutory period, a common approach that
Employment Tribunals take is to make a protective award of pay for
the balance of the consultation period.
Enforcement of the Protective Award
If the Employment Tribunal has made a protective award but the
employer fails to pay one or more employees a protective award at
all, or pays less than those employees are entitled to, in order to
enforce their individual entitlements, those employees have to make
a further claim to the Employment Tribunal. This could be done
with the assistance of the Union's Legal Services Department
but has to be in the name of the individual member(s) and not in
the Union's name.
The Employment Tribunal claim has to be made within three months of
the failure to pay. Generally the Employment Tribunal's
original protective award will have specified when the employer
should pay and this is the date that time starts to run from. If
the Employment Tribunal's award does not specify a date by
which the employer must pay, then the time limit should be
calculated from the date of the award itself. If a member misses
the three month deadline then the member's entitlement to their
protective award payment is lost unless the Employment Tribunal is
satisfied that it was not reasonably practicable for the
member's claim to be made within three months.
(b). TUPE (The Transfer of Undertakings (Protection of
Employment) Regulations 2006)
The purpose of the TUPE legislation is to protect
employees when the "undertaking" for which they work is
transferred from one legal person (which includes a company) to
another. The legislation recognises two types of TUPE transfer:
1. a business transfer which involves the transfer of an
"economic entity which retains its identity"
("economic entity" is defined as "an organised
grouping of resources which has the objective of pursuing any
economic activity, whether or not that activity is central or
ancillary");
2. service provision changes which cover contracting in,
contracting out and changes of contractor
TUPE therefore applies to a wide variety of situations including
takeovers, mergers, management buy outs and contracting in,
contracting out and re tendering. TUPE does not apply to
transactions which are share sales only.
The parties to a TUPE transfer are called the transferor and
transferee. In some cases the fact that TUPE applies will be
obvious and not disputed. In more difficult cases the transferor,
the transferee (or both) may claim that TUPE does not apply. The
question of whether or not TUPE does apply in such cases is
resolved by the Tribunal examining precisely what has been
transferred. The application and meaning of TUPE is one of the
most complex and often uncertain areas in employment law and so
TUPE questions can be referred to the Legal Services Department.
Rights of Employees
If TUPE does apply then employees have a number of rights,
including;
1. the right to transfer along with the undertaking in which they
are employed on the same terms and conditions (and with their
continuity of service protected)
2. the right to object to the transfer if they do not want to
transfer (but in many cases this will mean that their employment
terminates without the right to claim unfair dismissal)
Other than where employees object to the transfer, any dismissal
for a reason connected to a TUPE transfer will be automatically
unfair, unless the employer has an "economic, technical or
organisational" reason for the dismissal which entails changes
in the workforce. The practical effect of this is that an employer
can make redundancies that are connected to a TUPE transfer
provided it goes through a fair procedure first. Employees are
also protected against transfer connected changes to their terms
and conditions unless the employer has an economic, technical or
organisational reason which entails changes in the workforce for
making the changes.
Consultation
In addition TUPE requires information and consultation. The
requirements are very similar to those for collective redundancies
(see above). If the Union is recognised then the information and
consultation has to take place with an authorised official of the
Union. For those members who work for employers that do not
recognise the Union, representatives need to be appointed or
elected, but there is no reason why these representatives cannot be
union members.
The employer is obliged to inform and consult the representatives
of the "affected employees". The employer must inform
those representatives of:
1. the fact of the transfer, approximately when it is to take place
and why;
2. the legal, economic and social implications of the transfer for
the employees;
3. whether the employer envisages taking any action in connection
with the transfer which will affect the employees (and if so what
action - e.g. a reorganisation);
4. in the case of the transferor, any information that the
transferee has given to it about any action which the transferee
envisages taking that will affect the employees
Remedy
If either the transferor or the transferee fails in their
information and consultation obligations then a protective award
claim can be made. The rules and time limits for a TUPE protective
award claim are the same as for redundancy protective award claims;
however the maximum award for a TUPE protective award is thirteen
weeks pay.
